Interest rate increases affect real estate projects

Real estate projects are the most sensitive when it comes to interest rates increases, particularly the office segment, which relies on the rent flow, according to Rasvan Radu, CEO of UniCredit Tiriac. “Hedging products (which provide coverage against interest rate risks and exchange rate risks) are very important, but many developers are not aware that this is a cost worth paying. In many cases, we forced them to use the products in order to be protected from risks, and those who used them stood to gain in this period,” Rasvan Radu told ZF. UniCredit Tiriac has over 450 corporate real estate clients in its portfolio, as well as credits (contracted and already granted) of over one billion euros. Radu says unspecialised players have emerged on the market of real estate financing, which treat real estate financing the same as the other corporate financing, which is a “very big mistake.” “If there is a market decline, consequences can be quite serious. I firmly believe one needs to be specialised in order to handle real estate financing projects,” added the head of UniCredit Tiriac.